Strong earnings boost stocks

Encouraging economic reports and corporate results propel gains

Associated Press

Published 7:10 pm, Thursday, October 23, 2014

Photo: Richard Drew

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This Oct. 2, 2014 photo shows a Wall Street sign adjacent to the New York Stock Exchange, in New York. Earnings gains from General Motors, 3M and other big companies are driving stocks sharply higher in early trading Thursday, Oct. 23, 2014. (AP Photo/Richard Drew) ORG XMIT: NYBZ101 less

This Oct. 2, 2014 photo shows a Wall Street sign adjacent to the New York Stock Exchange, in New York. Earnings gains from General Motors, 3M and other big companies are driving stocks sharply higher in early ... more

Photo: Richard Drew

Strong earnings boost stocks

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A combination of strong company earnings and encouraging economic reports, both in the U.S. and Europe, gave the stock market another day of solid gains on Thursday.

Caterpillar jumped after its third-quarter earnings report was better than Wall Street analysts had been expecting. The company also raised its profit outlook for the year. 3M, the maker of Post-it notes, industrial coatings and ceramics, was among other companies that gained after releasing impressive third-quarter results.

Investors were also cheered by a report that showed the number of people applying for U.S. unemployment benefits remains at a historically low level, suggesting that hiring is gaining steam. In Europe, a survey of businesses eased concerns that the region may be slipping back into recession.

Solid company earnings are sending the stock market higher and helping it recover from a jarring drop in mid-October that gave the Standard & Poor's 500 index its biggest slump in two years. The index has gained on five of the last six days, and on Tuesday logged its biggest advance of the year.

"The economic backdrop here in the United States is continuing to look strong. Earnings are validating that," said Karyn Cavanaugh, a senior market strategist at Voya Investment Management.

Eight of the ten sectors in the S&P 500 gained, led by a surge in industrial companies after Caterpillar and 3M reported their earnings.

Caterpillar said that some belt tightening had helped it contend with a slowing global economy. The company's CEO said he was hopeful that economic growth would pick up next year. Caterpillar's stock rose $4.70, or 5 percent, to $99.27. 3M gained $6.10, or 4.4 percent, to $145.05.

Companies in the S&P 500 have reported earnings growth of 5.5 percent for the third quarter, according to analysts at S&P Capital IQ.

The rate of growth has slowed from 10.4 percent in the second quarter, but is forecast to pick up in the final three months of the year.